I’ll start this column with full disclosure: I’m a [small] shareholder in Star Entertainment Group, so what I’m about to say either comes with a healthy sprinkling of bias or, alternatively, suggests I’m more attuned to recent events than those who have no juice in the game. I’ll let you decide which.
In the months and years since the transgressions of Australian casino giants Crown Resorts and Star Entertainment Group were laid bare during multiple inquiries, regulators have been particularly vocal about making them “pay” for their sins.
Victoria’s new regulator, the Victorian Gambling and Casino Control Commission (VGCCC), certainly hasn’t missed Crown Melbourne – firing out fines totalling AU$200 million (US$137 million) for Crown’s responsible gambling failures and the illegal use of China Union Pay cards for gambling transactions. In September, the VGCCC announced the commencement of a third round of disciplinary proceedings against Crown Melbourne, this time in relation to the company’s bank and blank checks practices.
Star has also been hit with two separate AU$100 million (US$68.5 million) fines – one each in New South Wales and Queensland – with the potential for more to come as governments continue to analyze the findings of their recent reviews.
Meanwhile, financial crimes watchdog AUSTRAC is in the midst of civil proceedings – against Crown, Star and SkyCity Adelaide – which promise to take yet another chunk out of each company’s bottom line.
And if that wasn’t enough, the NSW state government is looking to push through legislation that would increase the tax rate on poker machines in NSW casinos – effectively another tax on The Star Sydney as the only casino in the state operating poker machines.
Star has already warned of potential “restructuring”, likely through staff cuts, in response to impairment charges it says could reach AU$1.6 billion (US$1.1 billion) in FY23.
It would be remiss of me to suggest either Crown or Star deserve sympathy given what came to light during their respective inquiries, but the question has to be asked to regulators and governments alike: at what stage does such retrospective action become redundant, and who is it you’re trying to punish?
Given that the directors and senior executives responsible for the failures within Australia’s casino sector are now long gone, it seems that those who are copping the real brunt of this retrospective regulator action are the shareholders (noting that Crown has since been privatized).
Despite having had no knowledge of what was going on inside casino walls during the years in question and now having little say over any remediation initiatives being undertaken by the new suits in charge, it is these shareholders who are undeniably paying the price – in Star’s case through the complete collapse of share price (from a high of AU$6.08 in December 2017 to just AU$1.29 as of mid-February) and the absence of dividends as financial pressures grow.
Australian state governments have refrained from revoking casino licenses, for now at least, but in the meantime seem intent on fining and taxing the operators out of existence.
This, of course, raises the question of who should be responsible for corporate wrongdoing: the officeholders or the companies? To a certain extent the answer must always be both, but governments across Australia might want to consider who stands to be punished most should they get the balance of responsibility wrong.